Corporate Trustees and Trust Deeds

[KatherineB]

I am looking to establish a corporate trustee trust structure ( Corporate trustee -> Trust -> Holding Co -> Operating co) for a startup, where the corporate trustee holds 100% of the shares in the holding company on trust for the beneficiaries. My confusion has come around how to make the shares in the Holding Co form part of the trust property.

1. In what order do I set up this structure? Do the Holding Co and Operating Co need to be incorporated before or after the trust deed is created? Does the settlor purchase the shares in the HC and then form the trust? Or does the settlor create the trust with a minimal sum e.g. $10 and then settle the shares in the company on the trust at a later date? Or is there a different method?
2. For the purposes of Stamp Duty, what determines the State that the Trust Deed is established in?
3. Will the trust need to have an ACN/ABN that is different from the Corporate Trustee?

 

[Rob Legat - SBPL]

1. If you want to allot shares in the operating company to the trust, the trust has to be set up before the operating company. And if you want the trustee of the trust to be the holding company, the holding company has to be set up before the trust. You can transfer shares/change trustees of course, but you're adding more steps to the process which are unnecessary.
2. The most usual method is where the trustee is domiciled when the trust is declared. It can change over time depending on where the trust assets are.
3. The trust will need its own ABN. The holding company won't need its own ABN unless it is going to trade in its own right (not just as trustee).

 

[Tim W]

I am looking to establish a corporate trustee trust structure ( Corporate trustee -> Trust -> Holding Co -> Operating co) for a startup

Why ever would you bother?

 

[Rod]

A lot of expense for a startup. You should only consider this where there are significant assets or operating profits and issues around the people who are beneficiaries that require a trust structure.

 

[Rob Legat - SBPL]

Be aware that changing your structure can be costly and difficult ‘down the track’. What may be overly complicated and expensive at the outset for a small venture may end up being exactly what is needed after serious growth.

There are also the aspects of asset protection and liability. For example, just having a stand alone company may not be sufficient protection if your industry imports personal liability to directors. Having a backup corporate trustee can eliminate down time if something should befall an individual trustee.

You should seek the advice of an accountant and a solicitor who can consider the whole situation.